Confidential
Settlement – $400,000Court
Ventura Superior
Attorneys
Plaintiff
Defendant
Experts
Plaintiff
Temmy Walker
(technical)
Michael A. Caggiano
(technical)
Richard Byrd
(technical)
Gary Girard
(technical)
Defendant
Dean Colin
(technical)
Facts
In October 1995, plaintiffs purchased defendant's long-time residence for $1,037,500, with the transaction closing in January 1996. During pendency of the transaction, plaintiffs' construction inspector and geologist questioned the drainage around the house and noted a possible plaster patch in the storage room. The defendant then executed an escrow modification stating, in pertinent part, that "there has never been any drainage problem on subject property with the exception of a drainage leak into the garage storage room in 1993. This was caused by a rupture of a drainage pipe by a large tree located on the rear lawn area. The tree was removed, the entire area was evacuated, new waterproofing was applied, new drains and a new French drain system were installed and concrete repaired. The problem had been resolved." Almost immediately after moving in, the house was inundated with a flood that covered the lower level of the house (office, laundry room, garage, storage room). Additional flooding and weeping of water through walls occurred on a continual basis thereafter. The plaintiffs brought this action against the defendant based on fraud, concealment and negligent misrepresentation theories of recovery.
Settlement Discussions
An initial settlement demand of $357,000 was made by plaintiff, later increased to $600,000, then to $750,000 after the production of the defendant's property insurer's claim file and the production of the defendant's records. The defendant's initial settlement offer was $135,000. Throughout two days of negotiations between the parties, plaintiffs reduced their demand to $400,000 and defendant increased his settlement offer to $400,000.
Damages
The plaintiffs claimed that the total damages sought for repairs, personal injuries and attorney fees and costs were $400,000.
Other Information
The settlement was reached approximately one year and three months after the case was filed. A mediation was held on June 23, 1997, before Richard Miller of Millen Arbitration and Mediation Services resulting in no settlement. During discovery, plaintiffs learned that the history of the property included flooding and/or leakage incidents in at least 1977, January 1993, March 1993 and January 1995, and that the defendant made no less than eight claims with his property/liability insurer from inception of his policy through 1993, at least two of which were water damage claims. Photographs and other records in the insurer's claim file, obtained by subpoena, included extensive correspondence to and from the defendant/insured regarding the flooding, and showed that the areas affected in these floods were not limited to the garage storage room but instead encompassed the entire lower level of the house, i.e., the storage room, the garage, the office adjacent to it, and the laundry room. The 1993 flood caused in excess of $9,000 in structural and cosmetic damage inside the house, including damage to the walls and floor coverings in the office and laundry room. The plaintiffs also learned of additional undisclosed problems with the planters, patio drainage and the retaining walls on the property, all of which were made known to the defendant in 1993.
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